Learning lessons from Lehman crisis
Bankers must ensure that practices that led to the bank's collapse are not repeated
The estate of collapsed US bank Lehman Brothers has emerged from bankruptcy protection and is expected to start making payments to its creditors by April, according to reports. Lehman's $639 billion (Dh2.35 trillion) bankruptcy remains the largest in US history and its 2008 collapse is generally seen to mark the start of the global financial crisis from which the world economy is still struggling to recover.
The company will concentrate on selling off its assets to pay its creditors who are expected to get around $65 billion. Lehman has a stake in Formula One and hotels, among other assets. While the payments might help repair some balance sheets, it will do little to restore public faith in banks.
There is little sign that financial institutions have learnt any lessons from the fate of Lehman Brothers. Banks are still resisting restrictions on trading for profit with their own funds and other commercial activities that could drag them into excessive risk-taking. They are also opposing banking regulations that will rein in incentive structures that encourage excessive risk-taking to inflate profits.
The global economy cannot afford another financial crisis and bankers and their regulators must ensure that the practices that led to the collapse of Lehman Brothers will not be repeated.
